R J M J & Associates Chartered Accountants No. 14, 1 st Floor, 80 Feet Road, Koramangala 1 st Block, Bangalore 560 034 India. Telephone: +91 80 4132 0909 Independent Auditor s Report To the Directors of Narayana Cayman Holdings Ltd We have audited the accompanying Ind AS financial statements of Narayana Cayman Holdings Ltd ( the Company ) which comprise the balance sheet as at 31 March 2018, the statement of profit and loss (including other comprehensive income), the statement of cash flows and the statement of changes in the equity for the year then ended, and a summary of significant accounting policies and other explanatory information (herein after referred to as Ind AS financial statements ) which has been prepared by management in accordance with the basis of accounting described in note 1.1 to the Ind AS financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation of the financial statements in accordance with the basis of accounting described in note 1.1 to Ind AS financial statements. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation of the Ind AS financial statements that gives a true and fair view and that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on the Ind AS financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company s preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company s management, as well as evaluating the overall presentation of the Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.
R J M J & Associates Chartered Accountants Independent Auditor s Report (continued) Opinion In our opinion and to the best of our information and accordingly to the explanations given to us, the aforesaid Ind AS financial statements give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs of the Company as at 31 March 2018 and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date. Basis of preparation and restriction on distribution and use Without modifying our opinion, we draw attention to note 1.1 to Ind AS financial statements which describes the basis of preparation of these Ind AS financial statements. These Ind AS financial statements have been prepared to provide information to Narayana Hrudayalaya Limited (the holding company ) for its financial reporting purposes. As a result, these Ind AS financial statements may not be suitable for any other purpose. Our report is intended solely for Narayana Cayman Holdings Ltd and Narayana Hrudayalaya Limited and should not be distributed without our prior written consent. for R J M J & Associates Chartered Accountants Firm s Registration Number: 015106S Rahul Jain Partner Membership number: 065815 New Delhi Date: 29 May 2018
Narayana Cayman Holdings Limited Standalone balance sheet as at 31 March 2018 Note 31 March 2018 31 March 2017 ASSETS Non-Current Assets Equity accounted investees 4 48,562,833 23,016,833 Financial assets Investments 5 1,665,170 620,554 Other non-current assets 6-286,000 Total non-current assets 50,228,003 23,923,387 Current Assets Financial assets Cash and cash equivalents 7 206,148 98,574 Loans 8 448,206 - Total current assets 654,354 98,574 TOTAL ASSETS 50,882,357 24,021,961 EQUITY AND LIABILITIES Equity Equity share capital 9 495 220 Other Equity 50,381,771 23,026,176 Equity attributable to equity holders of the parent 50,382,266 23,026,396 Total Equity 50,382,266 23,026,396 Current Liabilities Financial Liabilities Other financial liabilities 10 500,091 429,081 Other current liabilities 11-566,484 Total Current Liabilities 500,091 995,565 TOTAL EQUITY AND LIABILITIES 50,882,357 24,021,961 Significant accounting policies 3 The accompanying notes are an integral part of these financial statements As per our report of even date attached for R J M J & Associates Chartered Accountants Firm registration number : 015106S for Narayana Cayman Holdings Limited Rahul Jain Dr. Ashutosh Raghuvanshi Dr. Devi Prasad Shetty Partner Director Director Membership number: 065815 Place: New Delhi Place: Bengaluru Place: Copenhagen Date: 29 May 2018 Date: 29 May 2018 Date: 29 May 2018
Narayana Cayman Holdings Limited Statement of profit and loss for the year ended 31 March 2018 Note For the year ended 31 March 2018 For the year ended 31 March 2017 INCOME Other income 12 51,522 19,765 Total income 51,522 19,765 EXPENSES Employee benefit expenses 13 119,871 119,871 Other expenses 14 18,069 13,030 Finance costs 15 26,796 - Total expenses 164,736 132,901 Loss before tax (113,214) (113,136) Tax expenses: Current Tax - - Deferred tax (credit)/ charge - - Total tax expense - - Loss for the year (113,214) (113,136) Other comprehensive income for the year, net of tax - - Total comprehensive loss for the year (113,214) (113,136) Loss per share Basic and diluted 17 (3.97) (5.27) Significant accounting policies 3 The accompanying notes are an integral part of these financial statements As per our report of even date attached for R J M J & Associates Chartered Accountants Firm registration number : 015106S for Narayana Cayman Holdings Limited Rahul Jain Dr. Ashutosh Raghuvanshi Dr. Devi Prasad Shetty Partner Director Director Membership number: 065815 Place: New Delhi Place: Bengaluru Place: Copenhagen Date: 29 May 2018 Date: 29 May 2018 Date: 29 May 2018
Cash flow statement for the year ended on 31 March 2018 For the year ended 31 March 2018 For the year ended 31 March 2017 Cash flow from operating activities Loss before tax (113,214) (113,136) Adjustments: Interest income (51,522) (19,765) Operating cash flow before working capital changes (164,736) (132,901) Changes in other current liabilities (519,690) 105,905 Change in Other Current Assets (495,000) - Net cash generated from operating activities (A) (1,179,426) (26,996) Cash flow from investing activities Payment for long-term equity investments in Subsidiary (including share (25,260,000) (1,566,833) application money) Investment in promissory note in associate (1,053,729) (311,521) Interest income received 51,522 11,441 Net cash (used in) investing activities (B) (26,262,207) (1,866,913) Cash flow from financing activities Proceeds from issue of equity shares, including share application money 27,549,207 1,673,062 received Net cash provided by financing activities (C) 27,549,207 1,673,062 Net increase in cash and cash equivalents (A+B+C) 107,573 (220,847) Cash and cash equivalent at the beginning of the year (refer note 7) 98,574 319,421 Cash and cash equivalent at the end of the year (refer note 7) 206,148 98,574 The accompanying notes are an integral part of the financial statements. As per our report of even date attached for R J M J & Associates Chartered Accountants Firm Registration number: 015106S for Narayana Cayman Holdings Limited Rahul Jain Dr. Ashutosh Raghuvanshi Dr. Devi Prasad Shetty Partner Director Director Membership number: 065815 Place: New Delhi Place: Bengaluru Place: Copenhagen Date: 29 May 2018 Date: 29 May 2018 Date: 29 May 2018
Narayana Cayman Holdings Limited Statement of changes in equity for the year ended 31 March 2018 (a) Equity share capital Particulars No. of Shares Amount Equity shares of 0.01 each issued, subscribed and fully paid up Balance as at 1 April 2016 20,496 205 Changes in equity share capital during 2016-17 (refer note 9) 1,531 15 Balance as at 31 March 2017 22,027 220 Changes in equity share capital during 2017-18 (refer note 9) 27,469 275 Balance as at 31 March 2018 49,496 495 (b) Other Equity Reserves and Surplus Other Total other Securities Premium Retained earnings comprehensive equity Particulars Reserve income Balance as at 1 April 2016 20,494,795 1,113,532-21,608,327 Loss for the year - (113,136) - (113,136) Other comprehensive income (net of tax) - - - - Total comprehensive income for the year - (113,136) - (113,136) Transaction recorded directly in equity Premium on issue of equity shares 1,530,985 - - 1,530,985 Balance as at 31 March 2017 22,025,780 1,000,396-23,026,176 Loss for the year - (113,214) - (113,214) Other comprehensive income (net of tax) - - - - Total comprehensive income for the year - (113,214) - (113,214) Transaction recorded directly in equity Premium on issue of equity shares 27,468,809 - - 27,468,809 Balance as at 31 March 2018 49,494,589 887,182-50,381,771 Securities premium Securities premium is used to record the premium received on issue of shares. The accompanying notes are an integral part of these standalone financial statements. As per our report of even date attached for R J M J & Associates Chartered Accountants Firm registration number : 015106S for Narayana Cayman Holdings Limited Rahul Jain Dr. Ashutosh Raghuvanshi Dr. Devi Prasad Shetty Partner Director Director Membership number: 065815 Place: New Delhi Place: Bengaluru Place: Copenhagen Date: 29 May 2018 Date: 29 May 2018 Date: 29 May 2018
Notes to financial statements for the year ended 31 March 2018 1. Company Overview Narayana Cayman Holdings Ltd ( the Company ) was incorporated on 7 May 2010 as a Company limited by shares under the laws of the Cayman Islands. The registered office of the Company is located at, 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9007, Cayman Islands. The Company s holding company is Narayana Hrudayalaya Limited, incorporated in India and has a network of multispecialty and superspeciality hospitals spread across multiple locations. 2. Basis of preparation of financial statements 2.1 Statement of compliance The financial statements have been prepared in accordance of Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules 2015. These Ind AS financial statements have been prepared to provide information to Narayana Hrudayalaya Limited (the holding company ) for the purposes of Consolidated financial statements and financial reporting for the year ended 31 March 2018 and may not be suitable for other purposes. Details of the accounting policies are included in Note 3. 2.2 Functional and presentation currency These financial statements are presented in United States Dollars ( USD ), which is also the Company s functional currency. All amounts are presented in USD, except share data and per share data, unless otherwise stated. 2.3 Basis of measurement The financial statements have been prepared on the historical cost basis except for the following item: Items Certain financial assets and liabilities Measurement basis Fair value
Notes to financial statements for the year ended 31 March 2018 2.4 Use of estimates and judgments In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Judgments Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes: Note 16 - Provisions and contingent liabilities Note 20 - Financial instruments Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties that have significant risk of resulting in a material adjustment in the year ending 31 March 2018 is included in the following notes: Note 16- recognition and measurement of provisions and contingencies; key assumptions about the likelihood and magnitude of an outflow of resources. Note 5, 7, 8 and 20 - recognition of impairment of financial assets 2.5 Measurement of fair values A number of the Company s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in note 20 financial instruments.
Notes to financial statements for the year ended 31 March 2018 3. Significant accounting policies 3.1 Financial instruments a. Recognition and initial measurement Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. b. Classification and subsequent measurement Financial assets On initial recognition, a financial asset is classified as measured at - amortised cost; - FVTPL Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. All financial assets not classified as measured at amortised cost as described above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets: Business model assessment The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
Notes to financial statements for the year ended 31 March 2018 3.1 Financial instruments (contd) - the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets; - how the performance of the portfolio is evaluated and reported to the Company s management; - the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; - how managers of the business are compensated e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and - the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company s continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest For the purposes of this assessment, principal is defined as the fair value of the financial asset on initial recognition. Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers: contingent events that would change the amount or timing of cash flows; terms that may adjust the contractual coupon rate, including variable interest rate features; prepayment and extension features; and terms that limit the Company s claim to cash flows from specified assets (e.g. non recourse features). A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Notes to financial statements for the year ended 31 March 2018 3.1 Financial instruments (contd) Financial assets: Subsequent measurement and gains and losses Financial assets at FVTPL Financial assets at amortised cost These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss. These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Financial liabilities: Classification, subsequent measurement and gains and losses Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. c. Derecognition Financial assets The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset. If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised. Financial liabilities The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
Notes to financial statements for the year ended 31 March 2018 3.1 Financial instruments (contd) d. Offsetting Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. 3.2. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand and short-term deposits with an original maturity of three months or less which are subject to insignificant risk of changes in value. 3.3. Cash flow statement Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated. Bank overdrafts are classified as part of cash and cash equivalent, as they form an integral part of an entity s cash management. 3.4. Revenue recognition Interest For all debt instruments measured either at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss. 3.5. Employee benefits Short term employee benefits Employee benefits payable wholly within twelve months of receiving services are classified as short-term employee benefits. These benefits include salary and wages, bonus and exgratia. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by the employees.
Notes to financial statements for the year ended 31 March 2018 Post-employment benefits Defined contribution plans A defined contribution plan is post-employment benefit plan under which an entity pays specified contributions to separate entity and has no obligation to pay any further amounts. The Company makes specified obligations towards employee provident fund and employee state insurance to Government administered provident fund scheme and ESI scheme which is a defined contribution plan. The Company s contributions are recognized as an expense in the statement of profit and loss during the period in which the employee renders the related service. Defined benefit plans The Company s gratuity benefit scheme is a defined benefit plan. The Company s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned and returned for services in the current and prior periods; that benefit is discounted to determine its present value. The calculation of Company s obligation under the plan is performed periodically by a qualified actuary using the projected unit credit method. The gratuity scheme is administered by third party. Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income (OCI). The Company determines the net interest expense (income) on the net defined liability (assets) for the period by applying the discount rate used to measure the net defined obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes as a result of contribution and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the statement of profit and loss. The Company recognizes gains and losses in the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in the statement of profit and loss. Compensated absences The employees can carry-forward a portion of the unutilized accrued compensated absences and utilize it in future service periods or receive cash compensation on termination of employment. Since the employee has unconditional right to avail the leave, the benefit is classified as a short term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method. 3.6. Borrowing cost Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
Notes to financial statements for the year ended 31 March 2018 3.7. Earnings per share The basic earnings per share is computed by dividing the net profit attributable to equity shareholders for the period by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit attributable to equity shareholders for the year relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share. 3.8. Income tax There are no taxes on income, profits or capital gains in the Cayman Islands. The Company has received an undertaking from the Governor in the Cabinet of the Cayman Islands exempting it from all such taxes for a period of 20 years should such taxes be enacted. Accordingly there are no taxes recorded in the financial statements. 3.9. Foreign exchange transactions and translations Transactions in foreign currencies are recorded at prevailing rate at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in the statement of profit or loss. 3.10. Impairment a. Impairment of financial instruments The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost; At each reporting date, the Company assesses whether financial assets carried at amortised cost and debt securities at fair value through other comprehensive income (FVOCI) are credit impaired. A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit impaired includes the following observable data: significant financial difficulty of the borrower or issuer; the restructuring of a loan or advance by the Company on terms that the Company would not consider otherwise; it is probable that the borrower will enter bankruptcy or other financial reorganisation; or the disappearance of an active market for a security because of financial difficulties.
Notes to financial statements for the year ended 31 March 2018 The Company measures loss allowances at an amount equal to lifetime expected credit losses, except for the following, which are measured as 12 month expected credit losses: - debt securities that are determined to have low credit risk at the reporting date; and - other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. 12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company s historical experience and informed credit assessment and including forward looking information. Measurement of expected credit losses Expected credit losses are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). Presentation of allowance for expected credit losses in the balance sheet Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. Write-off The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the trade receivable does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company s procedures for recovery of amounts due.
Notes to financial statements for the year ended 31 March 2018 b. Impairment of non-financial assets The Company s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset s recoverable amount is estimated. For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs. The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset). The Company s corporate assets do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss. 3.11. Provisions and contingencies Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. Provisions for onerous contracts are measured at the present value of lower of the expected net cost of fulfilling the contract and the expected cost of terminating the contract.
Narayana Cayman Holdings Limited Notes to the standalone financial statements for the year ended 31 March 2018 (continued) 4 Equity accounted investees Particulars Unquoted Equity Instruments Investment in associates Health City Cayman Islands Ltd [48,426 equity shares (31 March 2017: 22,880) of $ 0.01 each fully paid up along with share premium of $ 999.99 per share] 31 March 2018 31 March 2017 48,426,000 22,880,000 Cura Technology Inc 136,833 136,833 [39,000,000 equity shares (31 March 2017: 39,000,000) of $ 0.01 each fully paid up] 48,562,833 23,016,833 5 Non-current Investments Unquoted debt instuments Investment in promissory note of Cura Technology Inc- amortised Cost 1,611,441 611,441 Accured interest on the promissory note 53,729 9,113 1,665,170 620,554 6 Other non-current assets (Unsecured and considered good, unless stated otherwise) To related parties Share application money pending allotment - 286,000 286,000 7 Cash and bank balances Balance with banks -On current accounts 206,148 98,574 206,148 98,574 8 Loans (Unsecured, considered good) Current To related parties Loans and advances 448,206-448,206-9 Equity share capital Authorised capital 5,000,000 equity shares (31 March 2017: 5,000,000 equity shares) of USD 0.01 each 50,000 50,000 Issued, subscribed and paid-up capital 49,496 equity shares (31 March 2017: 22,027 equity shares) of USD 0.01 each, fully paid-up 495 220 495 220
Narayana Cayman Holdings Limited Notes to the standalone financial statements for the year ended 31 March 2018 (continued) Reconciliation of number of equity shares outstanding at the begninning and at the end of the year Amount in USD, except no of shares Particulars 31 March 2018 31 March 2017 Number of shares Amount Number of shares Amount At the beginning of the year 22,027 220 20,496 205 Issued during the year 27,469 275 1,531 15 At the end of the year 49,496 495 22,027 220 Rights, preference and restriction attached to equity shares including distribution of dividends: The Company has only one class of equity shares referred to as equity shares having a par value of USD 0.01 each. Accordingly, all equity shares rank equally with regard to dividend and share in the Company's residual assets. Each holder of equity shares is entitled to one vote per share. Dividends will be payable as and when the Board propose and the share holders approves the same. The Company has not declared any dividend during the current year and previous year. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders. List of persons holding more than 5 percent shares in the Company: Amount in USD, except no of shares Particulars 31 March 2018 31 March 2017 Number of shares % holding Number of shares % holding Narayana Hrudayalaya Limited 49,496 100.00% 22,027 100.00% 49,496 100.00% 22,027 100.00% Shares held by holding company: 49,496 equity shares (31 March 2017: 22,027) of USD 0.01each are held by Narayana Hrudayalaya Limited, the holding company as at 31 March 2018. Therehas been no buy back of shares, issue of shares by way of bonus shares or issue of shares pursuant to contract without payment being received in cash during the current year and the previous years since the date of incorporation i.e. 7 May 2010. The Company does not have any shares reserved for issue under any other contracts. 10 Other financial liabilities (Current) Particulars 31 March 2018 31 March 2017 To related parties Application money received for allotment of securities 500,091 429,081 500,091 429,081 11 Other current liabilities To related parties Other payables - 566,484-566,484
Narayana Cayman Holdings Limited Notes to the standalone financial statements for the year ended 31 March 2018 (continued) 12 Other income Particulars For Year ended 31 March 2018 For Year ended 31 March 2017 Interest income on - Unsecured loan 51,522 10,652 - Others - 9,113 51,522 19,765 13 Employee benefits Salaries, wages and bonus 105,600 105,600 Staff welfare expenses 14,271 14,271 119,871 119,871 14 Other expenses Legal and professional fees 17,036 12,055 Bank charges 1,033 975 18,069 13,030 15 Finance costs Interest on holding company loan 26,796-26,796 -
Notes to the standalone financial statements for the year ended 31 March 2018 (continued) 16 Contingent liabilities and commitments Estimated amount of contracts remaining to be executed on capital account (net of advances) as at 31 March 2018 amount to USD Nil (31 March 2017: Nil). 17 Loss per share Basic earnings per share The calculation of basic earnings per share for the year ended on 31 March 2018 was based on loss attributable to equity shareholders of USD 113,214 (previous year: USD 113,136) and weighted average number of equity shares outstanding 28,509 (previous year: 21,470). Diluted earnings per share The Company has not issued any potential dilutive equity shares. Weighted average number of equity shares (basic) Shares For the year ended For the year ended 31 March 2018 31 March 2017 Opening balance 22,027 20,496 Effect of fresh issue of shares for cash 6,482 974 Weighted average number of equity shares for the year 28,509 21,470 The following table sets forth the computation of basic and diluted loss per share: Particulars Loss after tax for the period, attributable to equity shareholders Weighted average number of equity shares of USD 0.01 each used for calculation of earnings per share (Amount in USD, except no of shares) For the year ended For the year ended 31 March 2018 31 March 2017 (113,214) (113,136) 28,509 21,470 Loss per share - basic and diluted (3.97) (5.27) 18 Related party transactions (a) Details of related parties Nature of relationship Name of related parties Holding Company Narayana Hrudayalaya Limited Subsidiary Health City Cayman Islands Ltd ("HCCI")* Associate Cura Technologies Inc. (effective from 15 November 2016) * Associate up to 01 January 2018, wholly owned subsidiary effective 02 January 2018
Notes to the standalone financial statements for the year ended 31 March 2018 (continued) b) Transaction with related parties for the period ended 31 March 2018 Transaction Holding Company Subsidiary Company Associate Total Share application money received 27,000,010 - - 27,000,010 Shares issued during the year (including premium) 27,469,084 - - 27,469,084 Loan taken 715,000 - - 715,000 Loan repaid 715,000 - - 715,000 Interest expense on loan taken 26,796 - - 26,796 Interest income on unsecured loan given - 6,906-6,906 Loan given - 495,000 715,000 1,210,000 Loan repaid by - 46,794 715,000 761,794 Investment in equity shares (including share application money pending allotment) - 25,546,000-25,546,000 Convertible loan to associate - Cura Technologies Inc. - - 1,000,000 1,000,000 Interest income on Promissory note/ unsecured loan - Cura Technologies Inc. - - 44,616 44,616 Payment of expenses on behalf of the Company - 136,907-136,907 c) Transaction with related parties for the year ended 31 March 2017 Transaction Holding Company Subsidiary Company Associate Total Share application money received 1,673,062 - - - Shares issued during the year (including premium) 1,531,000 - - - Tranfer of patent 97,833 - - - Investment in equity shares of associate (including share application money) - Health City Cayman Islands Ltd - - 1,430,000 1,430,000 - Cura Technologies Inc. (including Fair value of transfer of patent USD 97,833) - - 136,833 136,833 Convertible loan to associate - Cura Technologies Inc. - - 300,080 300,080 Interest income on Promissory note/ unsecured loan - Cura Technologies Inc. - - 19,764 19,764 Payment of expenses on behalf of the Company - Health City Cayman Islands Ltd - - 131,926 131,926
Notes to the standalone financial statements for the year ended 31 March 2018 (continued) Related party transactions (continued) (d) The balances receivable from and payable to related parties as at 31 March 2018 Transaction Holding Company Subsidiary Company Associate Total Loans Health City Cayman Islands Ltd - 448,206-448,206 Share application money received, pending allotment: - Narayana Hrudayalaya Limited 500,091 - - 500,091 Investment in promissory note: - Cura Technologies (Convertible loan to associate), (excluding accrued interest) - - 1,611,441 1,611,441 (e) The balances receivable from and payable to related parties as at 31 March 2017 Transaction Holding Company Associate Total Trade Payable Narayana Hrudayalaya Limited 540,083-540,083 Health City Cayman Islands Ltd - 26,400 26,400 Share application money paid, pending allotment - Health City Cayman Islands Ltd - 286,000 286,000 Investment in promissory note: - Cura Technologies (Convertible loan to associate) - 620,554 620,554
Narayana Cayman Holdings Limited Notes to the standalone financial statements for the year ended 31 March 2018 (continued) 19 Investments and loans (a) The Company has paid the following amounts towards share application money for allotment of equity shares during the year ended 31 March 2018: Payment / (refund) Allotment Entity 31 March 2017 during the year during the year 31 March 2018 Health City Cayman Islands 286,000 25,260,000 25,546,000-286,000 25,260,000 25,546,000 - (b) The Company has made investment in the following Companies during the year ended 31 March 2018: Entity 31 March 2017 Allotment / Purchases during the year Sold during the year Provision for diminution 31 March 2018 Investment in equity instruments Health City Cayman Islands 22,880,000 25,546,000 - - 48,426,000 22,880,000 25,546,000 - - 48,426,000 (c) The Company has given unsecured loan (convertible loan) to the following associate during the year ended 31 March 2018: Entity Movement 31 March 2017 31 March 2018 Cura Technology Inc 611,441 1,000,000 1,611,441 611,441 1,000,000 1,611,441 Purpose of loans Financial assistance (f) The Company has paid the following amounts towards share application money for allotment of equity shares during the year ended 31 March 2017: Entity Payment/ (refund) Allotment 1 April 2016 during the year during the year 31 March 2017 Health City Cayman Islands 286,000 1,430,000 1,430,000 286,000 Cura Technology Inc - 39,000 39,000-286,000 1,469,000 1,469,000 286,000 (g) The Company has made investment in the following Companies during the year ended 31 March 2017: Entity Allotment / Purchases Sold Provision 1 April 2016 during the year during the year for diminution 31 March 2017 Investment in equity instruments Health City Cayman Islands 21,450,000 1,430,000 - - 22,880,000 Cura Technology Inc* - 136,833 - - 136,833 21,450,000 1,566,833 - - 23,016,833 * Allotment of shares also includes shares alloted towards transfer of patent valued at USD 97,833 by NHL. (h) The Company has given unsecured loan (convertible loan) to the following associate during the year ended 31 March 2017: Entity Movement 31 March 2016 31 March 2017 Cura Technology Inc 299,920 311,521 611,441 299,920 311,521 611,441 Purpose of loans Financial assistance
Narayana Cayman Holding Limited Notes to the standalone financial statements for the year ended 31 March 2018 (continued) 20 Financial instruments: Fair value and risk managements A. Accounting classification and fair values 31 March 2018 Amortised cost Total Financial assets Investments 1,665,170 1,665,170 Cash and cash equivalents 206,148 206,148 Loans 448,206 448,206 2,319,524 2,319,524 Financial liabilities Other financial liabilities 500,091 500,091 500,091 500,091 31 March 2017 Amortised cost Total Financial assets Investments 620,554 620,554 Cash and cash equivalents 98,574 98,574 719,128 719,128 Financial liabilities Other financial liabilities 429,081 429,081 429,081 429,081 Measurement of fair values The carrying value of all financial assets and liabilities approximates the fair value. B. Financial risk management The Company's activities expose it to a variety of financial risks: credit risk, market risk and liquidity risk. (i) Risk management framework The Company's risk management is carried out by a central treasury department under policies approved by the Board of Directors of the Holding Company. The Holding Companies Board supervises overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk and use of financial instruments. (ii) Credit risk Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to financial loss. The credit risk arises principally from its investing activities, including deposits with banks and financial institutions. Credit risk is controlled by analysing credit limits and creditworthiness of the counterparty on a continuous basis to whom the loans has been granted after obtaining necessary approvals for credit. There is no significant concentration of credit risk. Credit risk on cash and cash equivalent is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international credit rating agencies. (iii) Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company s reputation. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. The table below provides details regarding the undiscounted contractual maturities of significant financial liabilities as of 31 March 2018: Particulars Less than 1 year 1-2 years 3-5 years more than 5 years Total Other financial liabilities 500,091 - - - 500,091 Total 500,091 - - - 500,091 The table below provides details regarding the undiscounted contractual maturities of significant financial liabilities as of 31 March 2017: Particulars Less than 1 year 1-2 years 3-5 years more than 5 years Total Other financial liabilities 429,081 - - - 429,081 Total 429,081 - - - 429,081 (iv) Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, such as foreign exchange rates and interest rates. The Company does not have any exposure to Market risk. Cash flow and fair value interest rate risk The Company does not have any borrowings and does not have any exposure to cash flow interest rate risk.